United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 08-1747

___________

Semi-Materials Co., Ltd., *

*

Plaintiff - Appellee, * Appeal from the United States

* District Court for the Eastern

v. * District of Missouri.

*

MEMC Electronic Materials, Inc.; * [UNPUBLISHED]

MEMC Pasadena, Inc., *

*

Defendant - Appellant. *

___________

Submitted: June 9, 2009

Filed: July 10, 2009

___________

Before BYE, BEAM, and SHEPHERD, Circuit Judges.

___________

PER CURIAM.

MEMC Electronic Materials, Inc., and MEMC Pasadena, Inc. (collectively

MEMC), appeal the district court’s order finding it entered into a binding settlement

agreement with Semi-Materials Co., Ltd., and ordering specific performance of the

settlement terms. We remand.

MEMC manufactures polysilicon, and Semi-Materials manufactures

semiconductors using a process requiring polysilicon. Beginning June 2005, MEMC

and Semi-Materials entered into a series of contracts covering the sale of polysilicon

by MEMC to Semi-Materials. In September 2006, Semi-Materials sued MEMC
-2-

alleging it breached the contracts. On November 9, 2007, the parties attended a

mediation in hopes of settling the dispute. No settlement was reached but the parties

continued to negotiate.

At the unsuccessful mediation, a handwritten “term sheet” was compiled

delineating the salient terms to be covered by any settlement. On November 20, 2007,

using the handwritten term sheet as a guideline, counsel for MEMC sent an email to

Semi-Materials’s attorney, which included a Proposed Settlement Term Sheet. The

email contained an explanation of several of the proposed terms and concluded by

stating:

Much like Semi-Materials, MEMC does not want this to drag out. The

parties either need to agree now on these settlement terms, or not agree,

and proceed with the lawsuit. As a result, I have been instructed to

advise Semi-Materials that this settlement offer is MEMC’s last offer,

and that the offer will remain open until 5:00 p.m. on Friday, November

23, 2007. While I will not be in the office on Thursday or Friday, I will

have my Blackberry, and we can indicate assent to the Term Sheet via email as needed. Obviously, thereafter we would need to commence

drafting the actual Settlement Agreement (said differently, we are not

expecting to have the Settlement Agreement drafted and signed by

November 23; just agreement on this Term Sheet). Obviously, any

Settlement Agreement would need to include broad releases, including

releases broad enough to capture not only the disputes raised by the

allegations in the Amended Complaint, but other matters Semi-Materials

has raised regarding relationships between Semi-Materials and MEMC

and SMC Shanghai and MEMC.

Counsel for Semi-Materials responded to MEMC’s final offer on November 22,

2007, stating: “Semi-Materials hereby accepts MEMC’s settlement offer.” 

Over the next month, the parties exchanged several drafts of a proposed

settlement agreement but no final draft was agreed upon or executed. On December

26 and 27, Semi-Materials wired pre-payments to MEMC for a December 31, 2007,
-3-

shipment, as required by MEMC’s settlement offer. On December 26, MEMC

advised Semi-Materials it could not provide the shipment. On December 28, SemiMaterials advised MEMC it considered the November 20 final settlement offer

binding upon Semi-Materials’s unconditioned acceptance, and MEMC’s failure to

ship was a breach of the settlement agreement. Thereafter, Semi-Materials moved the

district court for an order enforcing the settlement and for specific performance.

The district court held MEMC’s final settlement offer contained in the

November 20 email and attachment constituted a binding offer of settlement. The

court further concluded a binding settlement agreement had been created by SemiMaterials’s unconditional acceptance of the offer. The court rejected MEMC’s

characterization of the final offer as conditioned upon the execution of the final

Settlement Agreement and the various releases. Additionally, the district court

ordered specific performance. On appeal, MEMC argues the district court erred

because 1) the parties’ communications made clear any settlement was conditioned

upon the execution of a written final Settlement Agreement and the necessary releases,

2) the Proposed Settlement Term Sheet could not reasonably be understood by SemiMaterials as a binding offer or agreement, and 3) the parties’ conduct demonstrated

the Proposed Settlement Term Sheet was not intended by either as a binding offer or

agreement.

Subsequent to the district court judgment granting specific performance, market

conditions drastically changed. Polysilicon or suitable substitutes became more

plentiful and the price of the product dramatically spiraled downward. As a result, a

few days prior to oral argument Semi-Materials moved this court for an order vacating

the district court’s order or, alternatively, an order affirming the district court but

remanding for consideration of Semi-Materials’s motion to rescind the settlement

agreement. Conversely, MEMC asks the court to reverse the district court’s decision

on the merits or, alternatively, to grant the motion to vacate with the added caveat that

it may recover its costs incurred on appeal. 
-4-

Simply stated, both parties now contend, for different reasons, that the specific

performance remedy, the action of the district court that provides this court with

appellate jurisdiction, is neither equitable nor desirable. Because of this underlying

change in circumstances, the parties request that we return this contract dispute to the

district court in its pre-settlement status. The parties differ, however, with respect to

whether MEMC should be allowed to recover its appellate costs.

After reviewing the record and the parties’ briefs and arguments, we find this

to be a just result and grant Semi-Materials’s motion to vacate. This returns the

dispute to the district court for further consideration of the claims and defenses of the

parties. The additional matter of MEMC’s costs on appeal is likewise placed within

the sound discretion of the trial court. See Fed. R. App. P. 39(e). We also remind

MEMC that it must file a bill of costs with the clerk of this court within fourteen days

of the entry of judgment if it wishes to preserve its right to recover any appellate costs.

See Fed. R. App. P. 39(d)(1); 8th Cir. R. 39A(b). 

Accordingly, we remand this matter to the district court for further proceedings

consistent with this opinion.

______________________________